Jens Asbjørn Bøgen
After years of steady decline, personal filings in federal bankruptcy court are surging once again.
For most of the past decade, personal bankruptcy filings in the United States drifted steadily lower, bottoming out in 2022. That trend has now reversed, and the figures released this fall confirm the shift.
Non-business bankruptcy filings rose 11.4 percent to 594,057 in the 12 months ending September 30, 2026, the Administrative Office of the U.S. Courts reported on October 22. Total filings, counting business cases, came to 621,111.
The increase is not a one-quarter blip. Filings have climbed in every quarterly reading since 2022, and in the 12 months ending June 30, 2026, total bankruptcies were up 12.2 percent year on year.
What is driving the surge
Household balance sheets have been under growing strain. Americans owed $1.26 trillion on credit cards at the end of the second quarter of 2026, the New York Federal Reserve reported in August, an increase of $54 billion from a year earlier.
About 4.7 percent of outstanding household debt was in some stage of delinquency, according to the same report.
The cost of carrying that debt is high. The Federal Reserve’s G.19 consumer credit report put the average rate on credit-card accounts assessed interest at 22.15 percent as of May 2026, with store cards and penalty rates running higher.
Chapter 7 and Chapter 13, in plain terms
About two of every three personal filers choose Chapter 7, which the U.S. Courts describe as a liquidation case in which a trustee sells the debtor’s nonexempt property and distributes the proceeds, after which most remaining debts are discharged. Households must pass an income-based means test to qualify.
Filers who earn too much for Chapter 7, or who want to keep a home facing foreclosure, generally use Chapter 13, the wage-earner plan, which allows people with regular income to repay all or part of their debts under a court-approved plan that typically runs three to five years.
The recovery lasts longer than the credit report shows
A bankruptcy stays on a US credit report for up to 10 years, but the financial scar lingers longer. Research by Boston University economist Jay Zagorsky and legal scholar Lois Lupica, summarized by Ohio State University, found that filers caught up to peers on savings in about 12 years, on total income in 14, on home ownership in 14, and on net worth only after roughly 26 years.
Before filing, federal law requires individual debtors to complete an approved credit-counseling course within the 180 days before the case is filed, a step meant to force a review of alternatives such as a debt-management plan.
